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Monday, March 14, 2011

Demographic spending trends are the key factors driving the economy of the developed consumer countries. These trends are predictable and can be used for forecasting. New generations of consumers have a predictable behavior with the spending wave peaking at the age of 47-49 and then followed by a decline. The populations estimate used in this article is taken from the United Nations. The spending wave is a concept developed by the HS Dent foundation.

Europe, Japan and Russia have just begun a very long-term decline in their spending wave / population that might last until the end of current century or longer.

There will be a succession of developing countries to peak in their spending wave with China first around 2020, then Southeast Asia/India and South America around 2065, and Africa last, by 2100.

Because economic booms are caused by waves of population growth, we will see a continued economic boom in some regions around the world, especially in Asia, Africa and Latin America, over the coming decades.

Unlike Europe, North America has a substantial echo baby boom that will create the last and final economical boom from around 2023/2024 into around 2050, before the United States see a long-term decline both in population and in economic growth until the end of the current century and possibly beyond. The trends in North America peak later then Europe largely due to higher immigration rates and higher birth rates among those immigrants.

Sournce: VisualizingEconomics . Click on the image to get a larger picture.

The graph shows the dramatic change in population over the last 500 years in China, India, Africa, Latin America, Western Europe, and United States. (Note: that the dip in 1950 of India’s population was due to the partitioning of India creating Pakistan.):